Everforth Inc

Previous wording

Consolidated revenues for the quarter were $968.3 million, the same as the year ago period. The table below shows our revenues by segment for the three months ended March 31, 2026 and 2025 (in millions).

Current wording

Consolidated revenues for the quarter were $1.0 billion, down 1.3 percent year-over-year. The table below shows our revenues by segment for the three months ended June 30, 2026 and 2025 (in millions).

Previous wording

Consolidated gross profit declined 3.2 percent year-over-year. Gross margin for the first quarter of 2026 was 27.5 percent, a contraction of 90 basis points compared with the first quarter of 2025. Gross margin for the Commercial Segment was down 140 basis points year-over-year primarily driven by business mix related to a smaller contribution from some of our higher-margin solutions within the Commercial Segment, as well as changes in foreign exchange rates related to our delivery center in Mexico. Gross margin for the Federal Government Segment was up 10 basis points, year-over-year.

Current wording

Consolidated gross profit declined 3.0 percent year-over-year. Gross margin for the second quarter of 2026 was 28.3 percent, a compression of 40 basis points comp ared with the second quarter of 2025. Gross margin for the Commercial Segment was down 90 basis points year-over-year, primarily driven bybusiness mix related to a smaller contribution from some of our higher-margin solutions including permanent placement revenues, as well as changes in foreign currency exchange rates primarily related to our delivery center in Mexico. Gross margin for the Federal Government Segment was up 40 basis points year-over-year, driven by focused efforts to improve profitability across the contract portfolio.

Previous wording

Selling, general, and administrative ("SG&A") expenses consist primarily of compensation expense for our field operations and corporate staff, information systems, rent, public company expenses, and other general and administrative expenses. SG&A expenses were $224.4 million, compared with $214.5 million in the first quarter of 2025. SG&A expenses in the first quarter of 2026 included $12.8 million in acquisition, integration, and strategic planning expenses, compared with $3.3 million in the first quarter of 2025.

Current wording

Selling, general, and administrative ("SG&A") expenses consist primarily of compensation expense for our field operations and corporate staff, information systems, rent, public company expenses, and other general and administrative expenses. SG&A expenses were $226.2 million, compared with $216.8 million in the second quarter of 2025. SG&A expenses in the second quarter of 2026 included $9.8 million in acquisition, integration, and strategic planning expenses, compared with $8.3 million in the second quarter of 2025.

Previous wording

Amortization of intangible assets was $14.5 million, compared with $14.3 million in the first quarter of 2025. The increase relates to the effects of the Quinnox acquisition, partially offset by older intangibles reaching the end of their useful lives.

Current wording

Amortization of intangible assets was $17.3 million, compared with $16.9 million in the second quarter of 2025. The increase relates to the effects of the Quinnox acquisition, partially offset by older intangibles reaching the end of their useful lives.

Previous wording

Interest expense, net, which consists primarily of cash-based interest expense, amortization and adjustments to deferred loan costs, and interest income, was $17.1 million, up from $15.4 million in the first quarter of 2025. The increase was due to higher outstanding borrowings. The weighted-average outstanding borrowings and cash-based interest rates in the first quarter of 2026 and 2025 were $1.28 billion and 5.2 percent, and $1.13 billion and 5.5 percent, respectively.

Current wording

Interest expense, net, which consists primarily of cash-based interest expense, amortization and adjustments to deferred loan costs, and interest income, was $20.4 million, up from $18.2 million in the second quarter of 2025. The increase was due to higher outstanding borrowings. The weighted-average outstanding borrowings and cash-based interest rates in the second quarter of 2026 and 2025 were $1.49 billion and 5.3 percent, and $1.28 billion and 5.6 percent, respectively.

Previous wording

The provision for income taxes was $5.1 million, down from$10.3 million in the first quarter of 2025 due to lower income before income taxes. The effective tax rate was 48.1 percent, up from 33.0 percent in the first quarter of 2025. The increase in the effective tax rate relates to tax shortfalls on stock-based compensation.

Current wording

The provision for income taxes was $6.5 million, down from $12.1 million in the second quarter of 2025 due to lower income before income taxes. The effective tax rate was 31.4 percent, up from 29.2 percent in the second quarter of 2025. The increase in the effective tax rate reflects higher foreign income taxes, the non-renewal of the Work Opportunity Tax Credit ("WOTC"), and lower income before income taxes.

Previous wording

Commercial Segment revenues were approximately 70 percent of total revenues and were up 0.5 percent year-over-year. From an industry perspective, the increase was mainly attributable to revenue growth from clients across Healthcare, Consumer and Industrial, and TMT. The revenue growth from those industries was partially offset by year-over-year declines across Business Services and Financial Services. Federal Government Segment revenues were approximately 30 percent of total revenues and were down 1.1 percent year-over-year. The decrease was mainly attributable to revenue declines from Defense and Intelligence and Federal Civilian agencies, as a result of initiatives associated with the Department of Government Efficiency (“DOGE”), which began at the end of the first quarter of 2025. The year-over-year effects of DOGE initiatives will lapse in the second quarter of 2026. Revenues from National Security agencies and Other customers increased year-over-year.

Current wording

Commercial Segment revenues were approximately 70 percent of total revenues and were down 0.2 percent year-over-year. From an industry perspective, the decrease was mainly attributable to revenue decline from clients across Business Services and Financial Services, partially offset by year-over-year growth across TMT, Healthcare, and Consumer and Industrial. Federal Government Segment revenues were approximately 30 percent of total revenues and were down 1.7 percent year-over-year. The decrease was mainly attributable to revenue declines from Defense and Intelligence and Federal Civilian agencies, partially offset by increases in revenues from National Security agencies and other customers.

Previous wording

Our working capital, which is current assets less current liabilities, at March 31, 2026, was $508.4 million, and our cash and cash equivalents were $143.6 million. Our cash flows from operating activities have been our primary source of liquidity and have been sufficient to meet our working capital and capital expenditure needs. At March 31, 2026, we had approximately $160.0 million available under the $500.0 million revolving credit facility. We believe that our cash and cash equivalents on hand, expected operating cash flows, and availability under our revolving credit facility will be sufficient to fulfill our obligations, working capital requirements, and capital expenditures for the next 12 months and beyond.

Current wording

Our working capital, which is current assets less current liabilities, at June 30, 2026, was $523.2 million, and our cash and cash equivalents were $152.9 million. Our cash flows from operating activities have been our primary source of liquidity and have been sufficient to meet our working capital and capital expenditure needs. At June 30, 2026, we had approximately $180.0 million available under the $500.0 million revolving credit facility. We believe that our cash and cash equivalents on hand, expected operating cash flows, and availability under our revolving credit facility will be sufficient to fulfill our obligations, working capital requirements, and capital expenditures for the next 12 months and beyond.

Previous wording

Net cash provided by operating activities was $18.5 million for the first three months of 2026, compared with $16.8 million in the same period of 2025. Net cash provided by operating activities before changes in operating assets and liabilities was $50.2 million, compared with $66.4 million in the same period of 2025. Changes in operating assets and liabilities resulted in net cash usage of $31.7 million for the first three months of 2026, compared with $49.6 million in the same period of 2025. This year-over-year change related to timing of payments. Both comparative periods had an increase in accounts receivable days sales outstanding, contributing to the seasonally low cash provided by operating activities in the first three months of the year.

Current wording

Net cash provided by operating activities was $70.7 million for the first six months of 2026, compared with $141.7 million in the same period of 2025. Net cash provided by operating activities before changes in operating assets and liabilities was $112.4 million, compared with $137.5 million in the same period of 2025. Changes in operating assets and liabilities resulted in net cash usage of $41.7 million for the first six months of 2026, compared with net cash provided of $4.2 million in the same period of 2025. This year-over-year change primarily related to an increase in accounts receivable days sales outstanding in the first six months of 2026.

Previous wording

Net cash used in investing activities for the first three months of 2026 was $293.0 million, comprised of $283.6 million used to acquire Quinnox and $9.4 million used for capital expenditures. Net cash used in investing activities for the first three months of 2025 was $316.3 million, comprised of $306.1 million used to acquire TopBloc and $10.2 million used for capital expenditures.

Current wording

Net cash used in investing activities for the first six months of 2026 was $298.9 million, comprised of $283.6 million used to acquire Quinnox and $15.3 million used for capital expenditures. Net cash used in investing activities for the first six months of 2025 was $325.4 million, comprised of $306.1 million used to acquire TopBloc and $19.3 million used for capital expenditures.

Previous wording

Net cash provided by financing activities was $257.6 million for the first three months of 2026 and included net borrowings under the senior secured credit facility totaling $293.1 million, offset by $39.0 million used to repurchase the Company's common stock. Net cash provided by financing activities in the first three months of the prior year was $201.2 million and included net borrowings under the senior secured credit facility totaling $248.7 million, offset by $50.4 million used to repurchase the Company's common stock.

Current wording

Net cash provided by financing activities was $220.3 million for the first six months of 2026 and included net borrowings under the senior secured credit facility totaling $269.2 million, offset by $50.5 million used to repurchase the Company's common stock. Net cash provided by financing activities in the first six months of the prior year was $116.3 million and included net borrowings under the senior secured credit facility totaling $177.5 million, offset by $59.9 million used to repurchase the Company's common stock.

Previous wording

There have been no recent accounting pronouncements that significantly impact the Company. All ASUs that are applicable are disclosed in our 2025 10-K and in Note 2. Accounting Standards Update in the notes to the condensed consolidated financial statements in Part I, Item 1 in this Quarterly Report on Form 10-Q.

Current wording

There have been no recent accounting pronouncements that significantly impact the Company.

Previous wording

There were no material changes to our critical accounting policies and estimates during thefirst quarter of 2026 compared with those disclosed in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2025 10-K.

Current wording

There were no material changes to our critical accounting policies and estimates during thesecond quarter of 2026 compared with those disclosed in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2025 10-K.